Intel Profits Surge 89 Percent as PC Demand Soars

Microprocessor giant Intel reported yesterday that--thanks to a soaring demand for new PCs--its first-quarter profits surged 89 percent compared with the same quarter a year earlier. The company made $1.73 billion on sales of $8.09 billion, compared with $915 million in earnings on revenues of $6.75 billion a year earlier. However, in a Microsoft-like move, Intel also cautioned investors about its second quarter and provided a conservative earnings forecast. Intel expects revenues of $7.6 billion to $8.2 billion for the current quarter.

"Intel's first-quarter results showed healthy growth in both revenue and earnings compared to a year ago, led by improvements in worldwide IT spending," Intel CEO Craig R. Barrett said. In particular, Intel executives cited strong corporate sales in Europe.

Intel's settlement of an Intergraph patent-infringement lawsuit dragged down the company's earnings a bit, however. Intel agreed to pay Intergraph $225 million and recorded $162 million in related charges. "If you take inventory out of everything, if you take Intergraph out of everything, we would have been right on our original forecast," Intel Chief Financial Officer (CFO) Andy Bryant said. Intel originally predicted its revenues would fall in the $8 billion to $8.2 billion range.

As with earlier quarters, Intel's microprocessor sales drove the company's financials. The Intel Architecture Group--which develops microprocessors, chipsets, and motherboards--grew first-quarter sales 22 percent to $6 billion. Intel says it now sells more than 1 million of its new Pentium 4 (code-named Prescott) chips each week, and the company expects that design to start outselling the older Pentium 4 version this quarter.

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